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Why did consumer prices rise last month? Gas prices. (+video)

Consumer prices rose 0.3 percent in December, largely due to an unexpected jump in gas prices and other energy costs. Gas prices could rise again in late January and put more upward pressure on the consumer price index. 

By Staff writer / January 16, 2014

Gasoline drips off a nozzle during refueling at a gas station in Altadena, Calif. A slight rise in gas prices put upward pressure on the consumer price index in December.

Mario Anzuoni/Reuters/File


Consumer prices rose 0.3 percent in December – its highest increase since June – largely on a surprising uptick in gas prices. 

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Staff Writer

David J. Unger is a staff writer for The Christian Science Monitor, covering energy for the Monitor's Energy Voices.

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U.S. consumer prices rose last month by the most since June, driven up by higher gas prices, but excluding energy, inflation was tame. The Labor Department said Thursday that the consumer price index rose a seasonally adjusted 0.3 percent in December, after a flat reading the previous month. Prices increased 1.5 percent in 2013, down from 1.7 percent in 2012. That's below the Federal Reserve's target of 2 percent. Grocery prices were flat, held down by the biggest drop in fruit and vegetable prices in five years.

Last month saw an unusually high number of drivers on the road for a time when most people are curled up by the fire. That put upward pressure on gas prices and in turn inflated the consumer price index (CPI).

Gas prices have remained largely flat since then, as the infamous polar vortex kept most of the nation indoors. But drivers could see more pain at the pump come later this month when refiners begin seasonal maintenance.

"Generally, when winter comes around people aren’t driving as much," says Michael Green, a spokesman for AAA, the national motor club based in Heathrow, Fla. "No one wants to drive when its dark and cold and icy outside, so they buy less gasoline." 

That doesn't appear to have been the case this past December. AAA projected 85.5 million would travel by car between Dec. 21 and Jan. 1. That's the highest number the motor club has ever forecast for the winter holidays. 

One possible explanation? Optimism about the nation's finances.   

"People believed the economy was stronger, and whenever that happens you do see more people driving," Mr. Green says.

Gas prices rose 0.7 percent in December, according to the Department of Labor. That may not seem like much, but because December gas prices are typically expected to fall, the change is more significant. The Department of Labor's seasonally-adjusted gas prices index jumped 3.1 percent, after falling 1.6 percent in November. That, combined with rises in fuel oil and electricity prices, made up the bulk of the CPI's 0.3 percent increase. 

So far, January hasn't seen much change in gas prices. The icy polar vortex froze over much of the nation, disrupting production at around a dozen refineries across the country, according to AAA. That threatened to raise gas prices, but it was offset by fewer people venturing outside during the subzero temperatures.

"Supply problems were balanced by decline in demand, given how cold it was," Green says.

National gas prices have been within a cent of $3.31 since Dec. 27, according to AAA, averaging $3.30 Thursday.

The end of January may not be as pleasant at the pump as many refineries go off-line to perform seasonal maintenance work. If the weather is mild, the economy grows, and people get out to drive, it could significantly boost gas prices.  


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